Your Guide to Prepare 2013 Income Tax Returns

Be Sure to Review the Documents for missing or incorrect information.

From time to time I am asked about ways to prepare documents to help organize information and control the time and cost associated with filing tax returns. The key for me has always been not to wait too long and to deliver most, if not all, of your relevant information at one time. I understand sometimes there is a slow Schedule K-1 that holds you up, put the other information in the hands of your CPA, so once the final items arrive; the return can be quickly completed.

Use the following guidance and insight to help you organize and deliver your 2013 information today so you can and stay focused on 2014.

1. Documents Related to a Change in Family Members

If during the year there was a change in the number of people living in your home, you will need to gather the necessary information to determine if you can include them as a dependent. If they are your child, gather their Social Security documents. If the other member of your household that can meet the definition of a dependent, you will also need their Social Security documents to claim them as a dependent.

2. Gather Key Tax Documents

Professionals can help secure documents.

By now most of your tax forms like the ones listed below should have been mailed:

W-2s from your employers,

1099-MISC forms for self-employment income,

1099-INT (interest) and 1099-DIV (dividends) forms,

1099-B forms showing brokerage trades in stocks and bonds,

K-1 forms for income from a partnership, small business, or trust,

1099-SSA form showing Social Security received.

Be sure to look at the documents and confirm that the amounts reported agree with your records. Look at your last pay-stub and confirm that it agrees with the Form W-2 you received from your employer.

Read the Consolidated 1099s for errors and collect the costs basis information for items sold during the year.

3. Adjustments to Income

If you made a contribution to a traditional Individual Retirement Account in 2014 for the 2013 tax year, be sure to provide the documentation to support the contribution. For 2013 if you are under 50 years old, you can contribute $5,500. If you are over 50 years old, you can contribute $6,500. Be sure to consider if the IRA should be a traditional Individual Retirement Account or to a Roth Individual Retirement Account

In addition to making an IRA contribution there are other opportunities to adjust your gross income and reduce your tax liability. Gather your documentation related to educator expenses, contributions into your Health Savings Account, payments of health insurance for self-employer individuals, alimony payments, and student loan interest. Also consider the costs of moving your home, and expenses for college.

When you are organized you have time to relax.

There are several types of expenses that qualify as a deduction against your income. The key is to gather and organize the information. Items to consider are as follows:

Medical Expenses, which are subject to a higher limit for certain taxpayers in 2013. Pull together all of the deductible and co-payments you paid during 2013. Be sure to include the costs of health insurance and long-term care insurance. You are also allowed to deduct 24 cents per mile for health care transportation.

Real Estate and personal property tax payments are also a deduction. Be sure to gather all of the property taxes paid. Also pull together the sales tax payments and state income tax payments.

Mortgage interest is deductible; collect the forms received from the mortgage company and review them for accuracy. Also gather your December 31, brokerage statement to support any investment interest deduction.

Charitable Contributions are being looked at closely by the Internal Revenue Service. Be sure to gather the official receipts provided by the qualified charities supporting your deduction. To the extent that you are contributing non-cash items, consider the need for an appraisal. Be sure to keep a detailed list of the property contributed and take pictures to help support the deduction.

Business Expenses are deductible. Gather your receipts for any unreimbursed employee business expense. Look for items related to your work activity that help you be more efficient and are a requirement of your work. Also look in the area of travel, training, software, equipment, tools and more. If you are self-employer, also consider items like computers, desks and other equipment and property.

Congress keeps changing the rules – keep an eye in available tax credits.

There are several tax credits available for taxpayers. If you made any energy efficient improvements to your home, gather the receipts to support the improvements. Other common areas include child care expenses, educational expenses, and foreign taxes paid. Also bring support for your estimated tax payments.

Do not forget to keep a copy of your tax return and try to keep adequate records throughout the current year so that 2014 will be easier.

If you have any questions or want to speak about a specific matter, please email me at mburger@markjburgercpa.com.